Uber DC won one regulatory battle, but they still haven’t won the regulatory war

posted at 8:41 pm on May 21, 2013 by Erika Johnsen

I’ve already written about the up-and-coming taxi service company’s troubles with getting past the commissions and the regulations and the permits and all of the other hallmarks of entrenched special interests in New York City, but Uber cab’s attempt to simply provide customers with the option of hailing a taxi with a smartphone app is being put through the ringer in the nation’s capitol, too.

Late last year and after much public outcry, Uber managed to settle with the D.C. city council their quest to merely be allowed to compete with the existing taxi industry and take up whatever market share of the D.C. transportation scene that patrons might voluntarily bestow upon them via the offer of a more convenient service, and Uber has since been doing their thing without incident — until now, womp. You knew it couldn’t be that easy, not when there’s rent-seeking to be done and free-market-thwarting gains to be had. From the DCist:

Uber’s taxi service works the same way as its flagship sedan service: A customer punches up the app, finds a map showing the nearest affiliated drivers, and requests a ride, which is paid for by automatically charging the fare to the customer’s credit card on file with Uber’s billing department.

But Uber argues that the the taxi regulations issued last week, which go into effect June 1, would require it to link its payment system to the payment providers integrated into the new meters that taxis will begin installing this summer. If a workaround cannot be found in the next two weeks, Uber says it might have to axe its taxi service in two weeks. …

The new regulations address the issue somewhat, stating that digital reservation services—such as Uber—are permitted to associate with one or all payment service providers that are integrated with the various brands of “smart meters” that cabs will be adopting. However, Uber already has a payment provider. In public comments the company submitted to the Taxicab Commission during the review period for the regulations, it noted that it has a third-party company process the credit card payments it accepts from customers.

But for his part, Kalanick is anticipating another showdown. “We thought this was done in December when the law passed,” he says. “But we’re back in it. I’m sure we’ll be in D.C. soon.”

Uber is already gearing up for the fight; they might be able to work out the regulations without too much ado, but they’re gathering their own lobbyists and have sent out a petition to rally their supporters.

The real question, of course, is why DC — and other cities like it — even have so much innovation- and freedom-crushing red tape that diverts so much of what could otherwise be everybody’s profitable time and resources into fighting for permission to operate a completely legitimate and highly efficient business that creates real jobs and improves people’s lives. You’d think that small businesses daring to threaten the established order were doing something illicit, what with all the hoops they have to jump through these days — and that is no way to grow any kind of economy, be it on a micro- or macro-level.

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The real question, of course, is why DC — and other cities like it — even have so much innovation- and freedom-crushing red tape that diverts so much of what could otherwise be everybody’s profitable time and resources into fighting for permission to operate and completely legitimate and highly efficient business that creates real jobs and improves people’s lives. You’d think that small businesses daring to threaten the established order were doing something illicit, what with all the hoops they have to jump through these days — and that is no way to grow any kind of economy, be it on a micro- or macro-level.

Just like the medieval guilds, the purpose is to protect the existing businesses from aggressive competition.

And yes, this undermines the whole free enterprise system. Fortunately, the startups just view it as one more obstacle to get past, and manage anyway. But it’s still a waste of time and money.

Had the opportunity to use Uber’s sedan service in L.A. a few weeks ago.

As soon as the service was ordered I knew that my car was 4 minutes away. I watched on the screen as it got closer and closer. When it hit 1 minute, I saw a black sedan on the opposite side of the street signaling to make a u-turn.

Contrast this with a year earlier when I called for a taxi in order to make the exact same trip. I was told that they were busy but they’d have someone there in 10 minutes. 15 minutes later I called and was told that someone would be there in 10 minutes. Another 15 minutes later I called and was told dispatch had sent someone and if they weren’t there in 5 minutes I should give them another call. 10 minutes after that I flagged down a passing cab and they got my business instead.

The Uber sedan service was $90 with tip. The taxi was $110 with tip.

If Uber wants to extend their business into the taxi realm (and they plan to keep the same level of service), it’s nothing but a boon to the residents of the cities they are operating in.

But Uber argues that the the taxi regulations issued last week, which go into effect June 1, would require it to link its payment system to the payment providers integrated into the new meters that taxis will begin installing this summer.